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4 Tips For Creating Income You Won’t Outlive

Jan 7, 2021 | Annuities, Money Management, Retirement Planning

Most people’s biggest concern when it comes to retirement is the thought of running out of income. This is definitely important, however, not something you should lose sleep over. There are many ways to ensure that you’ll have enough lifetime income to sustain your retirement.

When it comes down to it, most people want one thing when they retire: financial security. Financial security can mean knowing that you have enough money saved up, or enough money that will continue to come in, that will pay basic expenses and allow you the luxuries you desire during retirement.

Everyone has some sort of picture of their perfect retirement. The question is, based on the nest egg you have saved up currently, can you retain your lifestyle through the entire length of your retirement?

Here are 4 tips that could help you prevent outliving your retirement income.

1. Don’t Plan For Years – Plan for Decades

It’s important to plan for your retirement for the long term. Life expectancies are increasing which means your retirement time frame is as well. I think most of us would agree that running out of money would be worse than not spending it all. Make sure your plan is prepared to cover that extended time.

That being said, if you plan on retiring at the age of 60, your retirement plan should be able to provide income to support your lifestyle for at minimum another 25-30 years. Living until 90 years old is now more of a common occurrence than in the past.

Making sure that you don’t outlive your income is an important topic when creating your retirement plan is the first step to making that a reality. Talk to your financial advisor about how you can implement this into your current plan.

2. Annuities

When you meet with your Advisor to go through your portfolio and plan for your retirement, they may mention that you should consider supplementing your retirement savings with a product that can generate a continuous income stream for your entire retirement. One product that can provide this is an annuity. Annuities can be a safe and immediate way to generate income for you and your loved ones, especially if you’re already retired.

There are a few different types of annuities, each with its own cost, risk, and purpose. There’s fixed, variable, and fixed-indexed annuities. These types of annuities are offered in either immediate or deferred options. The most common types being fixed and fixed-indexed.

So, how do you determine which is right for you? That will depend on your goals, objectives and risk tolerance. It’s also important to note that there are scenarios when an annuity may not be right for you. For example, if you are not comfortable having your money tied up or think you might need large sums of your money in the near future, an annuity may not be for you.

There are lots of notions circulating around about annuities. You may be afraid to take the leap due to these misconceptions. ‘Annuities are a slow, conservative way to invest your money’, ‘annuities are just for retirees who want reliable income for their golden years’… these are just a couple of the statements you may have heard about annuities, both being untrue. This is why it’s crucial that you discuss annuities with your Advisor to get your questions answered and gain clarity as to whether this is the right investment vehicle to grow your assets during retirement.

3. Focus On Preservation With Your Portfolio

Majority of people focus on growing their portfolio pre-retirement so that when they do retire, they have as much funds as possible to pull from. Well now that you’ve reached that time, it’s more about preserving those funds than about growing them.

You should focus more on investments that emphasize income and capital preservation rather than pure growth.  Not only that, but the percentage of income-based assets in your portfolio will need to increase as you get older. This is to help prevent having to recover from an economic downturn, which can take years you may not have to recover from.

If you’re nearing retirement and have not discussed this with your financial advisor, it should be the first thing you mention at your next meeting.

4. Create A Post-Retirement Career

While at work, many of us dream of having time off to fill our days vacationing, playing golf, and relaxing with loved ones. But when retirement comes, we may actually find that we miss the work!

Having some sort of post-retirement career that generates you income can be extremely helpful when making sure you don’t outlive your income. This will allow you to require less money from your retirement investment plans.

Here are a few examples of good employment opportunities for retirees:

  1. Consultant/Freelance
  2. Golf Course
  3. Driver
  4. Event Staff
  5. Hotel Concierge
  6. Caretaker/House Sitter
  7. Pet Sitter
  8. Retail
  9. Tax Preparer

There are many ways to leverage your passion and experience into a rewarding post-retirement career – but don’t think you’re too old to learn any new tricks. Retirement can provide the opportunity to train for a new, exciting jobs with minimal time investment.

What’s The Point?

The point is, it’s important to have a solid plan for preventing outliving your retirement income. Stop lying awake at night going through your expenses and wondering how you will cover your costs when you retire. Educate yourself and meet with your financial advisor as soon as possible to go over your options and start putting a plan in place today so you can start living out your retirement dreams tomorrow.

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